Refinance debt abounds for hotels
Refinance debt abounds for hotels
07 JUNE 2012 7:31 AM

There's more refinance debt available today than acquisitions debt, according to Stephen Plavin, CEO of Capital Trust, during the NYU Investment Conference.

NEW YORK—The U.S. hotel debt outlook was significantly rosier a month ago than it is today based on a number of detrimental events during the past few weeks, said Stephen Plavin, CEO of Capital Trust, during the NYU International Hospitality Industry Investment Conference.

Plavin, on a panel with members of the Industry Real Estate Financing Advisory Council, said the stock markets are seized up and commitments to lend on hotel transactions have been withdrawn.

There’s more refinance debt available today than acquisitions debt, Plavin said.

“There’s plenty of capital—more capital than there are opportunities in the market,” he said.

Plavin said distressed mortgages aren’t flooding the market as hotel buyers expected simply because they’re getting worked out. Loans coming due today are mostly traditional five-year deals that were consummated in 2006. Debt is available to extend those loans, Plavin said.

“The new capital is also private equity and in some cases it’s the same firms but different sponsors,” he said.

Plavin said the foreclosure deal market is bogged down right now.

“It’s not that easy,” he said. “Foreclosing is a pretty complex web. Many of the 2006 and 2007 loans are still unresolved.”

On the flipside, however, Plavin said CMBS has again become a more significant source of capital. Insurance companies are more consistent lenders, he said, and Capital Trust is seeing new opportunities present themselves.

“We’re seeing some opportunities to participate in new acquisition deals,” he said.

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